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Octylamine-coated silver nanoparticles with an average size of 10 nm were synthesized and added to the AZO powder as fillers to increase the density of the sintered target. The resulting Ag-AZO nanocomposite powder was formed into compacts by a uniaxial pressing process. It was found that the addition of octylamine-coated silver nanoparticles can increase the density of AZO powder compacts by~4% after sintering. The optimum content of silver addition is about 0.13 wt%. It is suggested that the melted silver fills the void space between agglomerate pores and enhances the interconnection between nanocrystalline AZO powders. The films deposited using the here-synthesized Ag-AZO target showed lower resistivity and high carrier concentration compared with the one using AZO target.